Cost of insuring Romanias sovereign debt up to 4.2% in Q3.

By bne IntelliNews October 7, 2011
The cost of insuring Romania's 5-year sovereign debt increased to 4.2% in Q3 from 2.45% in Q2, according to calculations of CMA Datavision based on CDS trading, Mediafax informed. The cumulative probability of default for the next five years increased to 26.2% in Q3 from 16.2% in Q2. The deterioration in the perceived riskiness of Romania's sovereign debt has a visible impact on the Treasury's plans for imminent bond issues on the foreign markets, but also on the cost of domestic financing on the local credit market. The interest rates for new (euro-denominated) loans on the local market, where they account for some 60% of the stock of loans, are closely correlated with the CDS pricing. We recall that Romania plans to issue a USD bond toward the end of this year, as part of the medium-term notes programme.

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